Segmentation and Conversion: Closer to the Heart

By Jim Cain July 30, 2009

In a previous post I referenced the importance of considering only ‘convert-able’ traffic when looking at a goal conversion rate, i.e. only look at US visitor data if you don’t ship or service outside the US.

The reason that you always look at conversion when analyzing web data is because it allows you to always answer the “So What?” questions you receive when talking about data.

Lets use a few made up ‘boss conversations’ to illustrate:

No Conversion Data

“Ms. VP, our time spent per session has gone up 200% with European Visitors”

“So what?”

“….it’s just interesting is all….of course I’ll leave.”

Conversion Data“Ms. VP, our time spent per session has gone up 200% with European Visitors”

“So what?”

“Well, as time on site has gone up, conversion has gone down. Looking further into why, I see a high number of european views of our About Us and Shipping pages. I think we should add more up front information about our overseas shipping program and see how that impacts these numbers”

“I get it now. Make the change, keep me in the loop, and I want to give you a raise.”(or something like that)

You get the point.

Now if you want to take things a step further, there is a way to tie segmentation into conversion analysis to create an even clearer picture.

While there is such a thing as no-value visitor (one whom you can never convert), the majority of your visitors are normally people you can. Breaking down this group into segments based on how close they potentially are to your business allows you to better tie conversions into both analysis and optimization planning.

The example below is for an online merchant who has an average order size of 60-100 dollars, and the potential for repeat sales. The first thing we do is make a list of all the subsets of their traffic based on how close they are to the business, from cold to hot.

New Visitors, unbranded natural search

New Visitors, branded search

New Visitors, Paid Search

New Visitors, Direct Type In

Repeat Visitors, all search

Repeat Visitors, Direct type in

Visitors from Email Marketing Campaigns

Visitors who have created a wishlist or account (but no first purchase)

Visitors from Shopping Cart abandoner triggered email

Existing Customer visits

Each of these segments of your visitor population will have a completely different conversion rate, likely moving from quite low on the cold end of the spectrum to well above site average on the hot side.

This exercise alone will have you looking at your traffic in a totally different light, and asking a whole new set of questions that will allow you to optimize your business. Once you add in the percentage of traffic for each segment, you start to see significant opportunity costs in addressing the lower end of the spectrum. This will ultimately lead to the ability to plan to move visitors up the scale through mechanisms that don’t have adverse affects on the hotter categories.

Let’s go back to the discussion with the VP:

Conversion and Segmentation Data

“Ms. VP, while our conversion rate went up slighly last month overall, it was due to increased conversion from existing customers who got our summer specials email. Removing that visitor type means that we would have had lower than average conversions.”

“So What? We had a better month.”

“Our better month was because of a discount to people who have bought from us before, about 6% of our traffic. The majority of our underperformance comes from paid search new visitors, about 30% of our traffic. This group has no familiarity with our company, and our paid keywords all push visitors to our homepage. If we were to craft one or more custom landing pages for this visitor type, we would be able to educate on our business, increase sales, and optimize this segment over time.”

The more you understand who your visitors are in relation to ‘the heart’ of your business, and why they do (or don’t do) what you want online, the better you can influence decisionmaking with information and have an impact on your business.

Cheers,

Jim

This post’s takeaway: Try making a list similar to the one above for your business, and look at each segment’s conversion rate for the month of July. See what kind of questions it brings up and how much easier it is to define a plan of action.